First Word Newsletter August 2016

As winter and lack of supply bite into sales volumes four regions hit new record high median sale prices in July, with the national median sale price rising by $5,000 to $505,000, only $1,000 shy of the record median price reached in May 2016, according to data released by REINZ, (Real Estate Institute of New Zealand).

The Waikato/Bay of Plenty region recorded its eighth record median sale price in nine months, reaching $450,000 (up 2.7% on June 2016), while the median price in Auckland reached $825,000 (up 0.5% on June 2016), Northland reached $376,000 (up 4.4% on June 2016) and Manawatu/Wanganui reached $265,000 (up 6.4% on June 2016).

Inventory continues to fall rapidly nationwide, with a 33% decline in properties available for sale year-on-year and six regions seeing falls of greater than 40%. Wellington and Hawke’s Bay each have less than 10 weeks of supply available, with Waikato/Bay of Plenty at just on 10 weeks supply.

At the same time, the number of residential dwelling sales for July 2016 was 7,299, a drop of 7% on June. Sales volumes also fell 10% compared to July 2015, with sales for Auckland falling just over 20% compared to July last year.

Prices continue to rise in many regions, showing that demand is still firm. Sales volumes remain below previous periods, as the continued shortage of supply impacts buyers, who are struggling to find properties to buy.
We will watch market reaction with interest as the expected increase in listing numbers during the spring and summer selling period become available and the market assesses the impact of the recently announced LVR rule changes, the now approved Auckland Unitary Plan and possible interest rate cut.

Median prices jump, led by the regions: The national median house price rose $40,000 (+9%) to $505,000 from July 2015 to July 2016. Compared to June, the national median house price rose $5,000 (+1%). Central Otago Lakes recorded the largest percentage increase in median price compared to July 2015, at 32%, followed by Waikato/Bay of Plenty at 26% and Northland at 16%.

Auction sales up, Auckland auctions decline: 1,674 dwellings were sold by auction nationally in July, representing 23% of all sales, a decrease of 221 (-12%) on the number of auctions in July 2015.
Transactions in Auckland represented 61% of national auction sales, down from 74% in July 2015. The number of auctions in Waikato/Bay of Plenty has increased by 46% compared to July 2015, while the number of auctions has increased by 97% in Wellington, albeit off a small base, and by 69% across the rest of New Zealand excluding Auckland.

Pressure on stock grows, inventory and days to sell falls:
The number of properties available for sale across all regions in New Zealand has continued to fall between July 2015 and July 2016. Wellington has the fewest properties for sale with just under six weeks of supply, closely followed by Hawke’s Bay with nine weeks’ supply and Auckland and Waikato/Bay of Plenty with 10 weeks.

KIWISAVER RULES TWEAKED FOR SECOND CHANCE WITHDRAWALS

GOOD NEWS FOR THOSE THAT HAVE PREVIOUSLY OWNED PROPERTY
The Minister for Building and Housing, Dr Nick Smith, has recently announced that the income caps are being removed from the previous home owner eligibility criteria from 1 July 2016 (www.beehive.govt.nz/release/kiwisaver-home-buyer-support-tweaked).
Currently the income caps are $120,000.00 for a couple and $80,000.00 for an individual. The removal of the income caps will mean that previous homeowners who have low assets will be able to access their KiwiSaver funds to buy a home regardless of how high their income is.
You will still need to meet Housing New Zealand's criteria, which is as follows:
 you must be resident in New Zealand;
 you have not received a first home KiwiSaver withdrawal before;
 you have been contributing to KiwiSaver for at least three years;
 you have previously owned a home but at the time of your application you no longer have an interest in a property;
 your realisable assets are less than 20% of the house price cap for the area you are buying in (e.g. the current house price cap in Christchurch is $450,000.00 so your realisable assets must be under $90,000.00).
If you meet the above criteria you will be able to apply to Housing New Zealand for a Letter of Determination to submit to your KiwiSaver provider to show that you are eligible for the second chance withdrawal. Please note that an application for a Letter of Determination can take up to four weeks to process.

HOMESTART GRANT
Previous home owners may also qualify for the HomeStart grant, however there are further eligibility criteria required to obtain this grant, e.g. having at least a 10% deposit and complying with the house price caps for the area you are buying in, amongst other criteria.

SWITCH ON TO BETTER LIGHTING
Every little bit counts when you're selling your home. And even the bulbs in your light fittings can woo buyers. That's if they're modern, efficient LED bulbs.
These little rays of light make a big difference to the cost of lighting your home. They're a drawcard for environmentally conscious buyers.
LED lighting gives the impression to buyers that the house is more modern than those with old-style lighting. It doesn't necessarily add value to the sale price, but it increases appeal to buyers, which can help sell a home.
It might feel like you need a small mortgage when replacing a house lot of LED bulbs. But the individual bulbs are getting cheaper and more reliable. Not long ago LED bulbs cost over $20 and were only available from specialist retailers. These days you can buy them at the Warehouse and supermarkets with prices for ordinary bayonet-style bulbs starting at $11.99.
In return for the investment, home owners can get about 15 times the life of a standard bulb and they cost a quarter of the amount to run, says Christian Hoerning of EECA Energywise. "That means households can save up to $290 in running costs over the lifetime of one LED bulb," he says.